There are many people who need the money and only a few have the resource to find it. Reasons for the need of money may come from family emergencies or the need to expand a business or maybe to start one. For people who cannot fond a resource, they usually resort to loans in the bank or any lending organizations. When planning to have a loan in a bank or a lending organization, you will usually need to sign a loan agreement or contract.
What is a loan agreement or contract?
A loan agreement or contract is a written document that the lender and the debtor sign that binds their agreement in the issues that comes with a loan. The contract will protect both the lender and debtor should any of the two parties cannot come up with the agreement.
The contract discusses in full detail the agreement that both parties have made. But in those agreements, both parties should also put into consideration the standard laws of the government that have already been established. The laws are actually advantageous for both the debtor and the lender. The law works both two ways to protect both parties. They should also comply with the agreements made in the contract to prevent any legal intervention. Because a contract is a legal document, any violation of the contract can result in a case and the contract can also serve as evidence in the court.
Many issues concerning the loan are addressed and defined in the contract. One of these is fee and interest rates applicable so that the final amount associated with the loan can be calculated. The deadline for each payment or the full-payment should also be set on the contract. Agreements on the penalty of the debtor should he/she is unable to pay the amount on the said deadline should also be discussed and defined. The contact details and information of both the lender and debtor should also be included in the contract. And most importantly, the rights and responsibility by both parties should be properly spelled out in the contract. The consequences and the circumstances that are grounds for ending the contract should also be discussed in detail in the contract.
Together with these basic provisions in the contract, the laws set by the national and local government that is applicable in the loan made should also be clearly stated for the benefit of both parties. Other types of loans also include other details that are relevant to the loan like the security and facility details and other procedures like language provisions, waivers and others that are required by the regulations of the bank. Asking for legal help may be helpful for you to understand the contract better.
The discussed issues are usually applicable in loans made in banks, finance companies, and lending organization. In the case of personal loans, where the loan is made between two private individuals, the structure of a loan agreement may vary greatly. The structure may look just like a promissory note or may even just be a verbal agreement. Either way, it is just okay as long as both individuals had an understanding.